1031 Exchange to sell one investment property to LLC another?
Hi all,
This one is wracking my brain.
My wife and I have several investment properties all under either both our names or hers, all currently with mortgages attached to them.
We have one specifically we're looking to sell that isn't generating much return. Simultaneously, all of the other investment properties we have are under our names and we wanted to start converting them into LLCs.
The question I have is this:
If we sell the investment property in question, can we use a 1031 exchange to then buy out one of our other investment properties to convert it into an LLC?
#1 1031 Exchanges Contributor
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- St. Petersburg, FL
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#1 1031 Exchanges Contributor
- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
@Wayne Chen, In general a husband/wife LLC is a disregarded entity if it does not file it's own tax return. If that is the case for you then you would be selling and buying from...you. That would not be allowed.
If the LLC is a regarded entity and is taxed as a partnership or s corp then even though it is technically it's own tax payer it is a tax payer that is owned 100 by you. and the LLC would be selling and then buying from a very closely related party. That would also not be allowed.
